Ch 14 Notes Flashcards
14-1 The Importance of Retailing
The millions of goods and services provided by retailers mirror the diverse needs, wants, and trends of modern society.
The U.S. retail industry is responsible for generating 6 percent of gross domestic product (GDP)
Retailing affects everyone, both directly and indirectly.
The retail industry is dominated by only a few large companies
Trends and innovations relating to customer data, social media, and alternative forms of shopping are constantly developing, and retailers have no choice but to react.
The best retailers actually lead the way by anticipating change and developing new and exciting ways to interact with customers
The Importance of Retailing
14-2 Types of Retailers and Retail Operations
Retail establishments can be classified in several ways:
Type of ownership, level of service, product assortment, and price.
14-2 Types of Retailers and Retail Operations
Types of Stores
- Department Store
- Specialty Store
- Supermarket
- Drugstore
- Convenience Store
- Full-Line Discount Store
- Specialty Discount Store
- Warehouse Club
- Off-Price Retailer
- Restaurant
14-2 Types of Retailers and Retail Operations
Level of Service: Moderately high to high
Product Assortment: Broad
Price: Moderate to High
Gross Margin: Moderately High
Department Store
14-2 Types of Retailers and Retail Operations
Level of Service: High
Product Assortment: Narrow
Price: Moderate to High
Gross Margin: High
Specialty Store
14-2 Types of Retailers and Retail Operations
Level of Service: Low
Product Assortment: Broad
Price: Moderate
Gross Margin: Low
Supermarket
14-2 Types of Retailers and Retail Operations
Level of Service: Low
Product Assortment: Broad
Price: Moderate
Gross Margin: Low
Drug Store
14-2 Types of Retailers and Retail Operations
Level of Service: Low
Product Assortment: Medium to narrow
Price: Moderately High
Gross Margin: Moderately High
Convenience Store
14-2 Types of Retailers and Retail Operations
Level of Service: Moderate to Low
Product Assortment: Medium to Broad
Price: Moderately Low
Gross Margin: Moderately Low
Full Line Discount Store
14-2 Types of Retailers and Retail Operations
Level of Service: Moderate to Low
Product Assortment: Medium to Broad
Price: Moderately Low to Low
Gross Margin: Moderately Low
Specialty Discount Store
14-2 Types of Retailers and Retail Operations
Level of Service: Low
Product Assortment: Broad
Price: Low to Very Low
Gross Margin: Low
Warehouse Club
14-2 Types of Retailers and Retail Operations
Level of Service: Low
Product Assortment: Medium to Narrow
Price: Low
Gross Margin: Low
Off Price Retailer
14-2 Types of Retailers and Retail Operations
Level of Service: Low to High
Product Assortment: Narrow
Price: Low to High
Gross Margin: Low to High
Restaurant
14-2a Ownership Arrangement
Retail ownership takes one of three forms:
- Indepentantly Owned
- Part of a Chain
- Franchise Outlet
14-2a Ownership Arrangement
Owned by a person or group and is not operated as part of a larger network.
Around the world, most retailers are independent, with each owner operating a single store in a local community.
Independently Owned
14-2a Ownership Arrangement
Group of retailers (of one or more brand names) owned and operated by a single organization.
Under this form of ownership, a home office for the entire chain handles retail buying; creates unified operating, marketing, and other administrative policies; and works to ensure consistency across different locations
Chain Store
14-2a Ownership Arrangement
Retail business for which the operator is granted a license to operate and sell a product under the brand name of a larger supporting organizational structure
-Franchisor and Franchisee
Franchises can provide both goods and services, but increasingly, the most successful franchises are services retailers
Four of the top five franchises recognized by Entrepreneur magazine are fast-food restaurants.
Franchise
14-2b Level of Service
Provide range from full service to self-service
Exclusive clothing stores, offer very high or even customized service levels. They provide alterations, credit, delivery, consulting, liberal return policies, layaway, gift wrapping, and personal shopping
Retailers such as factory outlets and warehouse clubs offer virtually no service. After stock is set out for sale, the customer is responsible for any information gathering, acquisition, handling, use, and product assembly.
At the extreme low end of the service continuum, a retailer may operate through a product kiosk or vending machine.
Level of Service
14-2c Product Assortment
Can also be categorized by the width and depth of their product lines
Width: assortment of products offered
Depth: number of different brands offered within each assortment
Stores often modify their product assortments to accommodate factors in the external environment.
Customers expect less variety among items that are of higher quality.
Product Assortment
14-2d Price
Traditional department stores and specialty stores typically charge the full “suggested retail price.”
Discounters, factory outlets, and off-price retailers use low prices and discounts to lure shoppers
Prices in any store format might vary not just from day to day, but from minute to minute
Online retailers and traditional brick-and-mortar stores that have invested in electronic tagging systems are increasingly adopting dynamic pricing strategies that enable them to optimize price as an item’s surging popularity or slow movement in real time
Customers have more information than ever before with tools that can compare prices from dozens of retailers at once. Consequently, many are not willing to pay full price anymore.
Some retailers have begun using pricing techniques to make customers believe that they are getting a bargain—even if they aren’t.
Some online retailers use customer information such as income, location, and browsing history to adjust their prices
This practice can lead to negative reactions from consumers if they realize that they are not receiving equal prices or if they feel that their privacy has been invaded
Price
14-2e Types of In-Store Retailers
Ex: Macy’s carries a wide range of products and specialty goods, including apparel, cosmetics, housewares, electronics, and sometimes furniture.
Each department acts as a separate profit center, but central management sets policies about pricing and the types of merchandise carried
Department Stores
14-2e Types of In-Store Retailers
Carry a deeper but narrower assortment of merchandise within a single category of interest.
The specialized knowledge of their salesclerks allows for more attentive customer service.
Ex: Office Depot and Ulta Beauty
Specialty Stores
14-2e Types of In-Store Retailers
Large, departmentalized, self-service retailers that specialize in food and some nonfood items.
Some conventional supermarkets are being replaced by much larger superstores.
Superstores offer one-stop shopping for food and nonfood needs, as well as services such as pharmacists, florists, salad bars, automotive services, and banking centers.
Ex: Kroger and Publix.
Supermarkets
14-2e Types of In-Store Retailers
Provide pharmacy-related products and services, but many also carry an extensive selection of cosmetics, health and beauty aids, seasonal merchandise, greeting cards, toys, and some refrigerated, nonrefrigerated, and frozen convenience foods.
Competed by adding more services such as 24-hour drive-through windows and low-cost health clinics staffed by nurse practitioners.’
Ex: CVS Pharmacy and Walgreens
Drugstores
14-2e Types of In-Store Retailers
Resembles a miniature supermarket but carries a much more limited line of high-turnover convenience goods.
These self-service stores are typically located near residential areas and offer exactly what their name implies: convenient locations, long hours, and fast service in exchange for premium prices.
In exchange for higher prices, however, customers are beginning to demand more from convenience store management, such as higher-quality food and lower prices on staple items such as gasoline and milk.
Ex: 7-Eleven and Circle K
Convenience Store
14-2e Types of In-Store Retailers
Discount Stores
- Full Line Discount Stores
- Super Centers
- Specialty Discount Stores
14-2e Types of In-Store Retailers
Ex: Walmart
Offers consumers very limited service and carry a vast assortment of well-known, nationally branded goods such as housewares, toys, automotive parts, hardware, sporting goods, garden items, and clothing.
Full Line Discount Store
14-2e Types of In-Store Retailers
Extend the full-line concept to include groceries and a variety of services, such as pharmacies, dry cleaning, portrait studios, photo finishing, hair salons, optical shops, and restaurants.
Ex: Target
Customers are drawn in by food but end up purchasing other items from the full-line discount stock.
Supercenters
14-2e Types of In-Store Retailers
Ex: Staples
Offers a nearly complete selection of merchandise within a single category and use self-service, discount prices, high volume, and high turnover to their advantage.
Category killer: Home Depot is a specialty discount store that heavily dominates its narrow merchandise segment.
Specialty Discount Stores
14-2e Types of In-Store Retailers
Sells a limited selection of brand-name appliances, household items, and groceries.
These are sold in bulk from warehouse outlets on a cash-and-carry basis to members only.
Ex: Sam’s Club and Costco
Warehouse Club
14-2e Types of In-Store Retailers
Ex: T.J. Maxx and Bed Bath & Beyond
Sell at prices 25 percent or more below traditional department store prices because they buy inventory with cash, and they don’t require return privileges.
Often sell manufacturers’ overruns, irregular merchandise, and/or overstocks that they purchase at or below cost.
Off Price Retailers
14-2e Types of In-Store Retailers
Off-price retailer that is owned and operated by a single manufacturer and carries one line of merchandise—its own.
Manufacturers can realize higher profit margins using factory outlets than they would by disposing of the goods through independent wholesalers and retailers.
Ex: Nike Factory Store and L.L. Bean Outlet
Factory Outlet
14-2e Types of In-Store Retailers
Turn customers into suppliers: preowned items bought back from customers are resold to different customers.
Used goods retailers can be either brick-and-mortar locations or electronic marketplaces
Used Goods Retailer
14-2e Types of In-Store Retailers
Provide both tangible products—food and drink—and valuable services—food preparation and presentation, table service, and sometimes delivery.
Secialty retailers in that they concentrate their menu offerings on a distinctive type of cuisine
Ex: Red Lobster and Caribou Coffee.
Restaurants
14-3 The Rise of Nonstore Retailing
Adds a level of convenience for customers who wish to shop from their current locations.
Besides pickup services, many retailers have created apps for smartphones to appeal to digital shoppers.
This addition allows consumers to shop at their own convenience, including when the physical store is closed.
Some changes to the physical store have resulted from these additions, including adding shelving or lockers by store entrances to make order pickup easier
Top trends go beyond curbside pickup, but include stock visibility, in-store locator, same-day delivery, and easy returns
Nonstore Retailing
14-3 The Rise of Nonstore Retailing
Major forms of nonstore retailing are
- Automatic vending
- Direct retailing
- Direct marketing
- Internet retailing (or e-tailing).
14-3 The Rise of Nonstore Retailing
Entails the use of machines to offer goods for sale
Ex: the soft drink, candy, and snack vending machines commonly found in public places and office buildings.
A key aspect of their continuing success is the proliferation of cashless payment systems in response to consumers’ diminishing preference for carrying cash.
Automatic vending has allowed marketers to tap into a new, unlikely audience: customers seeking luxury items on the go.
Automatic Vending
14-3 The Rise of Nonstore Retailing
Representatives sell products door to door, in offices, or at in-home sales parties.
Ex: The Pampered Chef, Cutco, and Mary Kay
Social media selling has flourished among direct sellers seeking to increase the number of products and services sold.
Many direct sellers now host digital parties on social media, where people can shop from the comfort of their own homes
Direct Retailing
14-3 The Rise of Nonstore Retailing
Comprise a form of automatic vending where services are the primary focus.
Ex: Automatic teller machines, pay-at-the-pump gas stations, and movie ticket kiosks allow customers to make purchases that once required assistance from a company employee.
Automatic vending comes with failure risks due to human or technological error.
Unless customers expect that they can easily recover from such errors, they may end up shopping elsewhere.
Some banks are attempting to avoid service failures at ATMs by reintroducing live interactions between customers and service employees.
With virtual teller machines (VTMs), customers can video chat with a live teller to eliminate some technology errors.
Self Service Technologies
14-3 The Rise of Nonstore Retailing
Includes techniques used to elicit purchases from consumers while in their homes, offices, and other convenient locations.
Ex: telemarketing, direct mail, and mail-order catalogs.
Shoppers who use these methods are less bound by traditional shopping situations.
Time-strapped consumers and those who live in rural or suburban areas are most likely to be DM shoppers because they value the convenience and flexibility it provides
Direct Marketing
14-3 The Rise of Nonstore Retailing
DM Occurs In Several Forms
1.Telemarketing
2.Direct Mail
3.Microtargeting
4.Shop at Home TV Networks
14-3 The Rise of Nonstore Retailing
Employs outbound and inbound telephone contacts to sell directly to consumers.
Ex: when individuals abandon high priced items in an online cart, telemarketing is an effective means of closing the sale.
One survey indicates that in a business-to-business (B2B) setting, 14 percent of sales and marketing leads come from telemarketing activity alone, surpassing the impact of print advertising, organic social media, and account-based marketing.
Telemarketing
14-3 The Rise of Nonstore Retailing
Highly efficient or highly inefficient retailing method, depending on the quality of the mailing list and the effectiveness of the mailing piece.
With direct mail, marketers can precisely target their customers according to demographic, geographic, and/or psychographic characteristics.
Direct mail has the highest return on investment at 112 percent across all mediums
Direct Mail
14-3 The Rise of Nonstore Retailing
Based on data analytics of census data, lifestyle patterns, financial information, and past purchase and credit history allows direct mailers to pick out those most likely to buy their products.
An effective tool for online retailing.
Many companies have purchased access to online search engine data, making it easier than ever to pinpoint customer preferences.
A customer’s online search history enables retailers to match their specific customer wants through targeted digital advertisements.
Microtargeting
14-3 The Rise of Nonstore Retailing
Produce television shows that display merchandise to home viewers. Viewers can phone in their orders directly on toll-free lines and shop with their credit cards
The Asia-Pacific region highly dominates the home shopping market. This includes China, the most prominent, South Korea, Singapore, Japan, and India.
Shop at Home TV Networks
14-3 The Rise of Nonstore Retailing
Enables customers to shop over the internet and have items delivered directly to their door
More than 70 percent of all retail website visits worldwide are via smartphones.
Additionally, 2.14 billion people worldwide purchase goods online in a single year.
Fifty-five percent of online shopping starts on Amazon
Online, interactive shopping tools and live chats substitute for the in-store interactions with salespeople and product trials that customers traditionally used to make purchase decisions.
Physical space restrictions do not exist.
While shopping, customers can take their time deciding what to buy.
Research has demonstrated that as shoppers begin to engage multiple devices in a single shopping task, the likelihood of an eventual purchase increases—especially when the consumer progresses from more mobile devices, such as a phone or tablet, to more fixed devices such as a desktop computer.
Online Retailing
14-3 The Rise of Nonstore Retailing
Refers to the way connected consumers exchange goods and services with one another through a digital marketplace.
This phenomenon has given rise to online exchange communities such as ride-share and grocery delivery services
Sharing Economy
14-3 The Rise of Nonstore Retailing
Facebook, Instagram, and Twitter, now known as X, enable users to immediately purchase items recommended by their social connections
Companies are eager to establish direct linkages between social networking platforms and their own websites owing to the belief that a product or service recommended by a friend will receive higher consideration from the potential customer
Social Shopping
14-4 Retail Operations Models
Can be summarized as a set of guiding principles
Specialty shops generally adopt a high-service approach that is supported by an agile approach to inventory.
By keeping a greater amount of floor stock (inventory displayed for sale to customers) and back stock (inventory held in reserve for potential future sale in a retailer’s storeroom or stockroom) on hand, a broader range of customer demands can be accommodated.
Also implies higher prices for customers, however, retail managers must make sure that they deliver on the promises their firms make to customers to secure their loyalty.
At the same time, these retail managers must control demand via promotions and other sales events to sell off slow-moving and perishable items, thereby making more room for items that are more popular.
Retail Operating Models
14-4 Retail Operations Models
Customers view stockouts as an indication of how desirable a product is, and in turn will buy an item that is similar to the out-of-stock item, regardless of whether they even wanted the original item
Stockouts
14-4 Retail Operations Models
Ex: Dikla had the convenience of shopping in stores, but when an item was out of stock, the employee was still able to close the sale by crossing over to their online channel.
Hybrid Strategy
14-4 Retail Operations Models
Some retailers carry no inventory at all.
Ex: Nordstrom unveiled a new concept store in West Hollywood called Nordstrom Local in which shoppers can try on sample clothes, get manicures, and enjoy beer, wine or coffee while working with personal stylists on site to craft their desired look
Experiential Shopping
14-4 Retail Operations Models
No physical retail store space is needed for displaying and selling merchandise.
Lower-cost remote distribution centers can be used
By moving online, a specialty store can gain the operational benefits of a mass merchandiser.
It can showcase exclusive or trendy items in an almost-free space to potential customers located around the world and can then fulfill demand from one of several localized distribution centers in a very short time.
Fulfillment times are specified by the customer
Advantage of Online Retail
14-5 Executing a Retail Marketing Strategy
Retail managers develop marketing strategies based on the goals established by stakeholders and the overall strategic plans developed by company leadership.
Strategic retailing goals typically focus on increasing total sales, reducing costs of goods sold, and improving financial ratios such as return on assets or equity
The tactical strategies that retailers use to obtain their goals include having a sale, updating décor, and launching a new advertising campaign.
The key strategic tasks that precede these tactical decisions are defining and selecting a target market and developing the retailing mix to successfully meet the needs of the chosen target market.
Executing a Retail Marketing Strategy
14-5a Defining a Target Market
Process begins with market segmentation
Customers’ desires and preferences change over their personal and professional life spans, and it is important for retailers to be sensitive to these changes by migrating their customers to new and different products as their buying patterns evolve.
Target markets in retailing are often defined by demographics, geographic boundaries, and psychographics because of the different needs that can be identified by these forms of segmentation.
Defining a Target Market
14-5b Choosing the Retailing Mix
Consists of six Ps: the four Ps of the marketing mix (product, promotion, place, and price) plus presentation and personnel
The combination of the six Ps projects a store’s (or website’s) image and influences customers’ perceptions
Choosing the Retailing Mix
14-5b Choosing the Retailing Mix
Width and Depth of product assortment
Price, store/website design, displays, and service are important to customers in determining where to shop, but the most critical factor is merchandise selection.
Many online retailers purposely focus on single product-line niches that could never attract enough foot traffic to support a traditional brick-and-mortar store.
After determining what products will satisfy target customers’ desires, retailers must find sources of supply and evaluate the products.
When the right products are found, the retail buyer negotiates a purchase contract.
Product
14-5b Choosing the Retailing Mix
Location and Hours
The physical location decision is important:
- because the retailer is making a large, semipermanent commitment of resources that can reduce its future flexibility.
- the physical location will almost inevitably affect the store’s future growth and profitability.
Algorithms consider traffic patterns and average income of nearby businesses to select the area with the greatest earning potential
Physical site location begins by choosing a community. Important factors to consider are the area’s economic growth potential, the amount of competition, and geography.
Convenience stores, often locate on the path of their customers’ daily commutes, which regularly means choosing a space situated in or near a transit hub or along heavily trafficked routes.
Specialty stores, can benefit from locating themselves close to other shopping locations since their products, and the product offerings of other stores in the area, can complement one another
Furniture, automobile, or upscale clothing retailers often gain an advantage by locating their stores as far away from their rivals as possible so their customers will not be able to assess competing prices or easily comparison shop.
By moving from spot to spot over the course of a day and parking outside events and heavily trafficked areas, mobile food trucks can maximize their exposure and adapt to changing markets.
Place
14-5b Choosing the Retailing Mix
After identifying a geographic region or community, retailers must choose a specific site.
Besides growth potential, the important factors to consider are neighborhood socioeconomic characteristics, traffic flows, land costs, zoning regulations, and public transportation.
A particular site’s visibility, parking, entrance and exit locations, accessibility, and safety and security issues are also important considerations.
Some of the online strategies include building communities, hosting webinars, encouraging co-creation, offering exclusive members-only content, and responding to feedback across a variety of channels and platforms
Place
14-5b Choosing the Retailing Mix
Freestanding sites now account for more than half of all retail store construction starts in the United States as more and more retailers are deciding not to locate in pedestrian malls.
Perhaps the greatest reason for developing a freestanding site is greater visibility.
Retailers often feel they get lost in huge shopping centers and malls, but freestanding units can help stores develop an identity with shoppers.
Also, an aggressive expansion plan may not allow time to wait for shopping centers to be built.
Freestanding Units
14-5b Choosing the Retailing Mix
Shopping centers first appeared in the 1950s when the U.S. population started migrating to the suburbs.
Typically located along busy streets. They usually included a supermarket, a variety store, and perhaps a few specialty stores.
Strip Centers
14-5b Choosing the Retailing Mix
One or two small department stores, more specialty stores, a couple of restaurants, and several apparel stores.
These community shopping centers provided off-street parking and a broader variety of merchandise
Community Shopping Centers
14-5b Choosing the Retailing Mix
Offering a much wider variety of merchandise started appearing in the mid-1970s.
Regional malls are either entirely enclosed or roofed to allow shopping in any weather.
Most are landscaped with trees, fountains, sculptures, and the like to enhance the shopping environment.
They have acres of free parking.
Regional Malls
14-5b Choosing the Retailing Mix
Often major department stores) are usually located at opposite ends of the mall to create heavy foot traffic.
Anchor Stores
14-5b Choosing the Retailing Mix
Typically combine outdoor shopping areas composed of upscale retailers and restaurants, with plazas, fountains, theaters, spas, coworking spaces, sports and entertainment facilities, hotels, residential units, and pedestrian streets.
They appeal to retail developers looking for an alternative to the traditional shopping mall
Lifestyle Centers
Most shoppers look for stores that guarantee product availability, more service employees, and time-saving opportunities.
Research indicates, for example, that to succeed, malls need to focus on transforming into Consumer Engagement Spaces based on the rising demand for things to do, rather than things to buy and own.
Focus heavily on experiential retail store formats complete with gyms, medical practices, nontraditional retailers, or ai augmented experiences for the consumer to enjoy a personalized brand experience
Pop-up shops are an important component since they give the shopper an unexpected treasure-hunting experience while simultaneously providing an experimental space for new retail concept
Need to include plenty of creative ways for visitors to spend their time, since time is the consumers’ ultimate luxury, including options like restaurants, theaters, museums, and other engaging attractions.
Consumer Engagement Spaces
14-5b Choosing the Retailing Mix
Advertising, Publicity, and Public Relations
The goal is to help position the store or website in customers’ minds. Retailers design intriguing ads, stage special events, and develop promotions aimed at their target markets
All the elements of an opening—press coverage, special events, media advertising, and store displays—are carefully planned.
Other promotions that are often used successfully include sales events, coupons, and discounts for certain products or customer groups.
One risk associated with store promotions, however, is brand cannibalization, a situation whereby the promotion intended to draw in new customers simply shifts current customers from buying one brand to another brand
- The retailer incurs significant expense in executing the promotion itself.
- The promotion creates inaccurate sales forecasts for both the promoted and cannibalized products, leading to stockouts of the promoted brand and financial losses from discounting the surplus inventory of the cannibalized brand
Focused on the local level. Local advertising by retailers usually provides specific information about their stores, such as location, merchandise, hours, prices, and special sales.
National retail advertising generally focuses on image
Promotion
14-5b Choosing the Retailing Mix
Ensuring sales with the right amount consumers are willing to pay
Retailing’s ultimate goal is to sell products to consumers, and the right price is critical to ensure sales.
Because retail prices are usually based on the cost of the merchandise, an essential part of pricing is efficient and timely buying
Value-based pricing,” which focuses on the value of the product to the customer more than the cost of the product to the supplier.
Price is also a key element in a retail store’s positioning strategy.
Higher prices often indicate a level of quality and help reinforce the prestigious image of retailers
Price
14-5b Choosing the Retailing Mix
Layout and Atmosphere
Helps determine the store’s image and positions the retail store in consumers’ minds.
The main element of a store’s presentation is its atmosphere
Might create a relaxed or busy feeling, a sense of luxury or efficiency, a friendly or cold attitude, a sense of organization or clutter, or a fun or serious mood
Presentation
14-5b Choosing the Retailing Mix
Most influential factors in creating a store’s atmosphere:
- Employee Type and Density
- Merchandise Type and Density
- Fixture Type and Density
- Sound
- Odors
- Visual Factors
14-5b Choosing the Retailing Mix
Refers to an employee’s general characteristics—for instance, neat, friendly, knowledgeable, or service oriented.
Density is the number of employees per thousand square feet of selling space.
While low employee density creates a do-it-yourself, casual atmosphere, high employee density denotes a readiness to serve the customer’s every whim.
Retailers must take care, therefore, to ensure that high employee density does not feel like “stalking” behavior to the customer.
Research suggests that if shoppers feel as though store staff is too closely watching them, they can become uncomfortable and leave without completing their purchase
Employee Type and Density
14-5b Choosing the Retailing Mix
Nordstrom or Neiman Marcus carries the best brand names and displays them in a neat, uncluttered arrangement.
Discounters and off-price retailers often carry seconds or out-of-season goods crowded into small spaces and hung on long racks by category—tops, pants, skirts, and so on—creating the impression that “We’ve got so much stuff, we’re practically giving it away.
Merchandise Type and Density
14-5b Choosing the Retailing Mix
Fixtures can be elegant (rich woods) or trendy (chrome and smoked glass); they can even consist of old, beat-up tables, as in an antique store.
The fixtures should be consistent with the general atmosphere the store is trying to create.
Fixture Type and Density
14-5b Choosing the Retailing Mix
Can be pleasant or unpleasant for a customer.
Music can entice some customers to stay in the store longer and buy more or to eat quickly and leave a table for others.
It can also control the pace of the store traffic, create an image, and attract or direct the shopper’s attention.
Studies show the type of music played can even influence a customer’s choice of product or the perception of the amount of time spent in a store
Sound
14-5b Choosing the Retailing Mix
Smell can either stimulate or detract from sales.
Research suggests that people evaluate merchandise more positively, spend more time shopping, and are generally in a better mood when an agreeable odor is present.
Other research shows that certain scents empower consumers and lead to more premium purchases
Retailers use fragrances as an extension of their retail strategy.
Studies also show odors can imprint a strong image in a customer’s mind and contribute to brand recall.
Odors
14-5b Choosing the Retailing Mix
Colors can create a mood or focus attention and therefore are an important factor in atmosphere.
Red, yellow, and orange are considered warm colors and are used when a feeling of warmth and closeness is desired.
Cool colors like blue, green, and violet are used to open up closed-in places and create an air of elegance and cleanliness.
Many retailers have found that natural lighting, either from windows or skylights, can lead to increased sales.
Outdoor lighting
Visual Factors
14-5b Choosing the Retailing Mix
The goal is to use all of the store’s space effectively, including aisles, fixtures, merchandise displays, and non-selling areas.
Makes shopping easy and convenient for the customer
Powerful influence on traffic patterns and purchasing behavior.
Includes where products are placed in the store. Many technologically advanced retailers are using a technique called market-basket analysis to sift through the data collected by their point-of-purchase scanning equipment.
Retailers can better acquire and use assets when they customize store layouts and merchandise mixes to the tastes of local consumer bases
Retailers have had to adapt physical operations to a new normal that includes health and safety for both workers and customers, and experts expect many of these changes will be permanent.
Retailers have also had to make the in-store experience more intriguing to draw customers out of the safety of their homes and into the physical space
Layout
14-5b Choosing the Retailing Mix
Customer Service and Personal Selling
Most retail sales involve a customer–salesperson relationship, if only briefly.
Sales personnel provide their customers with the amount of service prescribed by the retail strategy of the store
They persuade shoppers to buy. They must therefore be able to persuade customers that what they are selling is what the customer needs
Trading up and suggestion selling.
Trading up means persuading customers to buy an item at a higher price than the one they originally intended to purchase.
Suggestion selling, a common practice among most retailers, seeks to broaden customers’ original purchases with related items.
Suggestion selling by sales or service associates should always help shoppers recognize true needs rather than sell them unwanted merchandise.
Personnel
14-5c Enacting Shopper Marketing
Focuses first on understanding how a brand’s target consumers behave as shoppers in different channels and formats and then using this information in business-based strategies and initiatives that are carefully designed to deliver balanced benefits to all stakeholders—brands, channel members, and customers
Brings brand managers and account managers together to connect with consumers along the entire path to purchase, whether it be at home, on the go via mobile marketing, or in the store.
**One implication is the strategic alignment of customer segments.
-Brands’ core target consumers are compared to retailers’ most loyal shoppers in an effort to find intersecting areas where brands and retailers can pool their resources.
-The ideal outcome is a more focused marketing effort and a three-way win for brands, channel members, and customers.
Shopper Marketing
14-6 Retailing Decisions for Services
Service distribution focuses on four main areas:
- Minimizing Wait Times
- Managing Service Capacity
- Improving Service Delivery
- Establishing channel-wide network coherence
14-7 Addressing Retail Product and Service Failures
Occurs by design.
No retailer can be everything to every customer, and by making strategic decisions related to targeting, segmentation, and the retailing mix, retailers implicitly decide which customers will be delighted and which will probably leave the store unsatisfied.
In other cases, service failures are unintentional.
A product may be located where customers cannot easily find it (or it may remain in the stockroom, entirely out of customer view), or an employee may provide mistaken information about a product’s features or benefits.
Customer Dissapointment
14-7 Addressing Retail Product and Service Failures
Service recovery is handled proactively as part of an overarching plan to maximize the customer experience.
Actions that might be taken include:
- Notifying customers in advance of stockouts and explaining the reasons why certain products are not available
- Implementing liberal return policies designed to ensure that the customer can bring back any item for any reason (if the product fails to work as planned or even if the customer simply doesn’t like it)
- Issuing product recalls in conjunction with promotional offers that provide future incentives to repurchase
14-8 Retailer and Retail Customer Trends and Advancements
Retailers decide what to sell on the basis of what their target market wants to buy.
They base these decisions on market research, past sales, fashion trends, customer requests, and other sources.
Big data analytics
Big Data Analytics
14-8 Retailer and Retail Customer Trends and Advancements
Major reasons for returns include the item arriving damaged or broken and misleading item description.
Monitoring customer reviews can also identify other factors.
Resolving these issues may include better packaging and product descriptions, videos of products rather than static pictures, or the use of augmented reality or “fit true to size” reviews.
Retailer and Retail Customer Trends and Advancements
14-8 Retailer and Retail Customer Trends and Advancements
Recognize when a customer is in or near the store and indicate to an automated system that the customer is ripe to receive a marketing message via email or text.
Beacons can also notify sales associates to offer (or not offer) a coupon at the point of sale.
Carefully designed beacons can even have an aesthetic appeal
. At some retailers, cameras and beacons are built into mannequins located inside the store and in window displays.
These beacons act not as only data-collection devices but also as primary displays for the clothing and jewelry that appeal to customers’ eyes
Beacons
14-8 Retailer and Retail Customer Trends and Advancements
Retailers have begun using RFID to track items that customers pick up while shopping.
This enables a retailer to instantly create a promotion for the specific item in a customer’s hand.
The advertisement can provide guidance as to where to find the promoted items in the store.
Has the potential to make the checkout process much faster by enabling an entire cart of products to be scanned in seconds.
RFID (radio-frequency identification)
14-8 Retailer and Retail Customer Trends and Advancements
Retailer can then cross-reference these data with the customer’s location in the store, providing promotions and information with pinpoint accuracy.
Facial recognition even allows retailers to identify customers, call them by their names, and target them with personalized advertising based on their data as they walk through the retail space.
Similarly, biometric sensors can be used to measure how long a customer views an ad or product in the store.
Technology at self-checkout system can notify staff when to individuals appear to be underage when buying restricted items like alcohol, tobacco, or vapes
Facial Recognition
14-8a Future Developments in Retail Management
A retailing trend with great growth potential is the leveraging of technology to increase touchpoints and engagement with customers and thereby generate greater profitability
Use of mobile devices and social media while browsing, comparison shopping, and actually making a purchase is becoming extremely pervasive, leading retailers to rethink how they should appeal to shoppers in the decision-making mode.
Showrooming and data analytics have even led to the development of virtual reality apps and smart mirrors that enable customers to look at themselves wearing articles of desired clothing without physically putting them on
Retail Channel Omnification
Future Developments in Retail Management
14-8a Future Developments in Retail Management
Rather than waiting for orders to arrive at their homes, customers drive to physical stores to pick their orders up.
When retailers use this strategy, customers benefit from greater speed of delivery , while retailers themselves benefit from the fact that customers must enter their stores to claim their purchases.
Once inside, customers can be marketed to, increasing the likelihood that they will purchase add-on items or otherwise engage in impulse buying.
Click and Collect
14-8a Future Developments in Retail Management
Narrower customer choice had become an unexpected benefit, thereby increasing profitability through cost savings that offset sales price reductions.
Incremental variety can lead to incremental costs that outstrip the revenue gained from merchandise variety.
Retail analytics has been increasingly applied to create real time automated/flexible pricing changes.
Omnichannel Distribution
